MINNEAPOLIS, MN – Despite seeing strong performances in its fresh departments, Supervalu failed to meet analyst expectations in its second quarter fiscal 2016 earnings report.

Shortly after trading opened on Wednesday, Supervalu shares decreased approximately 5 percent following the release of the report.

The retailer has been seeking ways to revitalize its business after facing strong competition in an intense market. In July, Supervalu announced it would explore the possibility of separating its Save-A-Lot business so that the banner could pursue strategies specific to its business characteristics and growth potentials.

“The fresh departments, meat and produce, continued to perform well for Save-A-Lot. In spite of the deflationary impact on sales, units shipped on an identical store basis to licensees were up in both categories and combined ID sales in our corporate stores for these categories were positive,” said CEO Sam Duncan on a conference call with investors. “We continue to work on both categories and believe they are key differentiators of the Save-A-Lot brand.”

Supervalu reported net sales for the quarter to be $4.06 billion and net earnings from continuing operations at $37 million, adjusted for after-tax costs related to the potential separation of Save-A-Lot and severance costs. Gross profit for the second quarter was $583 million, or 14.4 percent of net sales, compared to $574 million during the same time last year.

Highlights from this quarter include:

• Consolidated operating earnings of $94 million for Q2 fiscal 2016
• Adjusted EBITDA of $166 million for Q2 fiscal 2016
• Save-A-Lot sales, operating earnings and Adjusted EBITDA increase over last year’s quarter
• Ninth consecutive quarter of positive Save-A-Lot corporate sales ID sales

“I’m pleased that we increased adjusted EBITDA in the second quarter compared to last year in spite of several operating headwinds,” Duncan said in a press release. “Our focus remains on driving sales across all three segments and finishing the year strong.”

Second quarter Save-A-Lot sales were $1.09 billion, compared to $1.06 billion last year, an increase of 3.2 percent, thanks to new store openings. Operating earnings in the second quarter for the banner were $32 million.

Retail Food net sales were $1.09 billion for the quarter, compared to $1.11 billion last year, a decrease of 1.2 percent.  Operating net earnings in the second quarter were $10 million.

Duncan, who announced his retirement this month, said that the company expects to open approximately 50 new corporate stores this year, in addition to approximately 40 new licensee locations for a total of about 90 gross new store openings by the end of fiscal 2016.

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